Canadian Dollar Falls As Economy Sheds Jobs, Raises Unemployment Rate

The Canadian dollar is sliding against several major currency rivals to finish out the trading week. The loonie’s descent was driven by a mostly disappointing labor report that saw the economy experience its weakest three-month period of job creation in more than a year. Housing numbers were also down, though many of them were better than what the market had anticipated.

According to Statistics Canada, the economy shed 24,200 jobs in July, raising the jobless rate to 5.7%. The market projected a gain of 12,500 jobs and an unchanged unemployment figure of 5.5%.

But it was not all bad news. Year-over-year average hourly wages came in at a strong 4.5%. This is the highest level they have been in more than a decade.

In other data from the Canada Mortgage and Housing Corporation (CMHC), July housing starts surged 222,000, down from 245,000 in the previous month. June building permits contracted 3.7%, which is an improvement from May’s 12.2% decrease. On Thursday, the new housing pricing index for June dipped 0.1%

Next week will be new motor vehicle sales and foreign securities purchases data for June.

Despite the jobs numbers impacting the loonie at the end of the trading week, a new Reuters poll of economists suggests the Canadian dollar will strengthen against the greenback due to economic stability in the Great White North. Since topping a nine-month high in July, the loonie has declined 2%, mainly because of crude oil entering a bear market and investors expressing caution.

Ottawa presently maintains a current account deficit and exports a diverse array of commodities, so the economy would be impacted by intensifying trade disputes. Should the Bank of Canada (BOC) meet market expectations of two cuts to interest rates by the end of 2020, then it could affect the loonie’s performance over the next couple of years.

The USD/CAD currency pair rose 0.31% to 1.3276, from an opening of 1.3227, at 13:06 GMT on Friday. The EUR/CAD jumped 0.3% to 1.4827, from an opening of 1.4785.

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